Yahoo Board Meets About Microsoft, Fears Google Treatment

Yahoo's board of directors is meeting July 23 to discuss a potential search engine and online advertising partnership with Microsoft, according to the Wall Street Journal. Some Yahoo directors fear any tie-up with Microsoft may not survive regulatory scrutiny. The concerns recall Google's failure to ink a search ad deal with Yahoo more than a year ago to block Microsoft from buying the Web services provider.

Updated: Yahoo's board of directors plans to meet July 23 for an update about a potential
search partnership with Microsoft, but some Yahoo directors fear any tie-up with Microsoft may
not survive regulatory scrutiny, according to the Wall Street Journal.AllThingsDigital and 24/7 Wall Street July 16 reported a rekindling of conversations
between Microsoft and Yahoo about a search and online ad deal. In the deal,
Microsoft would run its ads on Yahoo's search engine.

There is a display advertising element to the deal, with Yahoo taking the
lead in selling premium advertising for the companies.

24/7 Wall Street reported
that Yahoo will be paid $3 billion up front and will get 11 percent
of the revenue that its searches provide after traffic acquisition costs in
each of the first two years. In the third year, that figure would rocket to 90
percent.
Icahn blessed the Microsoft deal, and now it's time for the latest
details on the latest conversations. Facts are scant, but according to the Wall
Street Journal's sources:

The meeting follows several Yahoo board calls in recent days.

People familiar with the situation said it is unlikely that any
deal would be announced Thursday. Some Yahoo directors still have
concerns about striking the partnership.

Some directors have expressed concerns with whether the deal would
pass muster with regulators, according to two people familiar with
their thinking.

Yahoo declined to comment on the Wall
Street Journal piece for this report. Still, the latter detail about regulatory
concerns stood out.
The Center for Digital Democracy said July 22, "Microsoft and Yahoo
should expect privacy and consumer groups to vigorously press regulators to
closely and skeptically examine any deal." CDD Executive Director Jeffrey
Chester told eWEEK:

Privacy groups, such as my CDD, have
been collecting "string" on both companies, in expectation of a deal.
We will provide this information to the FTC [Federal Trade Commission] or DOJ [Department
of Justice] and the Congress. A merger that further concentrates control by a
very few over the digital marketing and advertising business illustrates how
quickly consolidation has emerged as a principal and worrisome feature of the
Internet era.